Retailers may halt PSP GO

The latest version of Sony’s popular handheld gaming console, the PlayStation Portable Go, has caused quite a ruckus among major retailers across Europe. The new sliding mechanism, increased processor speed and general aesthetics are bound to turn some heads, but the lack of a port for Sony’s Universal Media Disc (UMD) promises to hit sales at video game stores considerably.

Multiplesources have reported that major Dutch video game stores (Game Mania, Bart Smit and Media Markt) and a large number of French stores are refusing to sell the new console.

You see, a video game retailer’s big money does not come from the console itself, but instead from the games that are sold on it. The business model is similar to that of shaving razors and their blades, where the subsidised prices of the razors are made up for by sales of blades later.

So when the new PSP GO (which, incidentally, is quite a redundant name – if it’s PlayStation ‘Portable’, do we really need the ‘GO’?) drops the need for a physical disc to play the game, it becomes difficult for a retailer to make a profit.

The PSP GO’s model for video game sales is completely digital, with users expected to buy their games over the Internet and download them via Wi-Fi, storing them on the internal 16GB of memory. While this might not be enough for most, the realization that a next iteration of the device could come with an expandable memory slot throws a lot more perspective on the business model.

So when Sony starts selling games directly to the gamer via the Internet, where is the average retailer supposed to squeeze his margins?

“With this PSP Go and its download-only system, is Sony saying they don’t need us in the retail distribution channel? We’re no use to them?” asked one unnamed retail source in an Itai News report.

The slow and steady rise of digital content is inevitable as Internet – especially wireless – technology grows, so it might be better for the retailers to figure out a way to join hands with the companies so that both industries survive. After all, with the PSP Go, Sony is one online retail store away from making video game stores redundant!

“But we’re business partners aren’t we? Shouldn’t there be some way we can improve distribution?” the disgruntled retailer said. “If they go ahead, specialist shops are going to be in trouble. My own motivation is really suffering from all this uncertainty.”

Still, there is some relief for such retailers who long for the UMD, as Sony has hinted that it will continue to sell its current PSP-3000 along side the PSP GO.

But as a user, it is simply more convenient to download a game over Wi-Fi or WLAN than to carry a bunch of UMDs around with you. Eventually, digital content is bound to be king, as the customer – spoilt for choices – will still be the emperor!